Pediatrix Medical (MD) 1 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the 2024 Third Quarter's Earnings Conference. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Charles Lynch. Please go ahead.

Thank you, operator, and good morning, everyone. forward-looking then our the get read call. quickly statements, we'll and into I'll

information of call they Any current and future conditions, assessments light the this to developments Pediatrix statements believe results, materially assessment to XXXX. during made Certain and actual appropriate. in as are to statements Pediatrix statements and conference business Important during and such including Litigation are Act result management by today, statements assumptions this revise based events the the described experience Factors. These or forward-looking could developments Securities be from company's within statements may sections information, made meaning call factors statements, duty Private of factors differ of to filings Federal Reform of expected of with forward-looking the be the forward-looking deemed on or SEC, in other no made new their historical as trends, a cause are decisions forward-looking of undertakes any whether Risk be and and entitled update future that otherwise.

www.pediatrix.com. report the can Form of earnings be In measures. comparable reconciliation financial we on our measures quarterly reports these our at most release and be measures to annual today's XX-K non-GAAP XX-Q will discussing GAAP found our A in financial morning's remarks management, by non-GAAP this website Form on and

over to the CEO, call I'll Now, Jim turn our Dr. Swift.

morning, Rossi, Chief our you, everyone. with Kasandra is Financial Charlie, Also Thank and me good today Officer.

across mix end quarter. to did to of line, by our quarter service results the the compared ahead moderate to our this positive third same-unit Similar top all core last growth. stable Patient driven provided toward operating expectations, tailwind modestly of primarily quarter third the to were year. the were a Our second lines volumes of quarter, payer although revenue of

we and reflecting Peds rose base Care births, positive Newborn Nursery, Pediatric across our Intensive slightly NICU total saw hospital side, Services. positive days the and modestly, comparisons On Hospital

maternal-fetal experienced volume remained side, On have the growth XXXX. as space we strong office medicine throughout

exposure were during September Looking not any to and hospital-based those while and some closures, quite our our at material Helene end disruptions and did we brief, the did early office see services. we to of Hurricane experience October, Milton

the I dedication. of harm's More hospital-based as for importantly, members affiliated Many and And of care possible are thank undertook space clinicians to our their patient their our remained during all storms. for are office in in patients similarly, quickly areas affected team to for our own our facilities who in their such those behalf great of prepare their for both in reopen as dedication way efforts, their the and on partners settings storms patients. to want care hospital to safe. teams

During the behind without completed to management successfully that cycle wave operating structure. our transition but And able the the a to quarter, any revenue results. not am our complete of disruption only we is final hybrid were meaningful transition it I we pleased us, to

vendor, new our and to shift performance. focus transition with collaboration our Guidehouse, from full in improved will worked has team we internal Our now driving

in $XXX $XX We million of an results. on end Under are annualized XXXX our the adjusted quarter. plan this also focused with based fourth businesses plan, exiting of approximately restructuring remain expectation EBITDA completing portfolio the by totaling we of on in million improvement revenue

XXXX in realize this expect portion a beyond. in the of XXXX We remainder to and and

to hospital exits, patient to ownership discussed ensure practice, moved quickly, I not pathways that but private these partnerships. our we and teams new identified thoughtfully including quarter, last operating appropriate transitions, for disrupted these are services during have have transitions As for

million of full for period and the of we $XXX and have to Based $XXX change has a narrowed million. and operating our adjusted of Pediatrix. on results outlook progress significant XXXX be our third our continues plans, EBITDA been quarter to year

our unchanged. attention service operating are profile To with efficiencies lines however, margin goals, create on for Our and solid those Pediatrix. and meaningful focus solidify financial our underpinnings

executing critical our we turn, and support to education. that enable plans and will research believe services investments collaborative highly patient clinical us on In in continued and

the a introduce I'd more XX been my be of leadership and tenure more months, this our like working increasing will and several Kasandra And taking pleasure Kasandra here. Chief one. transition now Treasurer. to organization. than senior Executive within the formally have ensuring I've finance with we spent throughout Vice our has past years, that over President, Rossi, own Financial had smooth on time the Officer for with roles her company significant

all Kasandra and to of and look I'll call to on dedicated us the forward the And experienced with Kasandra. very team over leadership leads continued that, organization, her company. finance to turn contributions the a

morning, good everyone. and Jim, Thanks,

Chief to First, like to Financial I'd as and Pediatrix thank team Board opportunity Jim, serve the for Officer. the our

career our I've our my noted, and I'm only to organization, continue Jim a but across our decisions decision-making, an of support an here, organization evolution. implications. have in financial such organization, honor time of considerable part which entire important that play strategic believer an finance a in spent should in true a at all not to As valuable such it's particularly important role,

can efficiently. management. shared I financial decisions. single informed are of shared talented operators analytics, part of as and more technology accounting, operating the services suite that work ensure and finance, goal well table enterprise my the to partners a information to business, we that overlap full dedicated of as functions data analytics consider ultimately towards automation and part of cycle revenue it and that our and And a identify with timely innovation our responsibility the have bring CFO These group so We make employees organization, data and opportunities every

some details additional provide I'll said, the on that With quarter.

just quarter, divestitures practice of this completed former $XX growth of reflected by both In under was urgent over and our revenue care during same-unit activity. strong primary offset the impact primarily the of our the consolidated X% restructuring dispositions growth, Our just and impact clinics. million portfolio total, reflecting

a did cost basis, same-unit same-unit the reflecting And side, these expenses On but revenue. salary underlying declined of we deceleration a than restructuring. period, but a as basis compared in year-over-year, to year growth. 'XX. and a portfolio expenses increase see pace prior On on only at to Not sequential practice-level year-over-year, year-over-year quarters as compared the did slower first SW&B also second our the

place staffing year across result primarily reductions incentive offset as footprint created our lines. we've of was the by increased expense structure staffing part partially compensation we put of results. as G&A fewer services hybrid year-over-year, have service revenue This our a in cycle Our efficiencies shared and management reflecting financial modestly on through smaller through the additional across

to anticipate to XXXX G&A on basis. continue expense be G&A will XXXX year We comparable a dollar that full

you the $X.X those compared For prior models, year. I'll million of amortization declined note our that to depreciation keeping in and $X.X million to expense

lower depreciation related forward, primarily practice dispositions reflects should and level decline fairly quarter being This consistent expense all our equal. going our third G&A else to be of

cash flow. quarter cash compared during operating We to the in million $XX million generated to in Moving year. flow $XX prior the third

generation. the $XXX revenue transition final EBITDA wave no net year. we cycle to We quarter Jim of of on over just cash with our ended from structure the adjusted just to hybrid the to a our cash quarter June under the $XXX leverage the our with completed million, midpoint noted, management disruptions during reducing of net million at X.Xx of outlook for XX. $XXX reflects based million debt This As

that the rates in time very substantially are to deposit interest our service balance respect currently to attractive With investing cash on accounts we costs. debt at sheet, are our that cash similar

cash XXX(k) accumulated of payments and We quarter expect 'XX contributions. to any to incentive make during our mainly and physician other payments, the cash in matching use XXXX early benefit this fourth compensation

potential beyond. we to turn any reduce QX expected borrowing intent 'XX to in cash before QX flow is and generation needs Our free in XXXX

for year, have now to over that, Finally, the on call XXXX narrowed X will of adjusted million our a to that $XXX to the first Jim. I'll based million. range of months reiterate of back I year $XXX the we With results turn full expectation EBITDA our

open now questions. call up the Thank for Operator, you, Kasandra. let's

our [Operator Instructions] with of first Daniels will line come the William Blair. question And from Ryan

is Senft Jack Ryan. for This

of staffing, to quarter bolster at into as as this the you you that and still increased you of Are part transition. RCM mentioned levels look going want we up fourth is like Or You into throughout that internal now, XXXX? the so? okay area I or to believe, kind year an be next

Yes.

efficiency we noted that to additional will believe on that, keep our are we are that the that management team to add fully in and up, staffed. as actually approximately course, should XXXX. And is we we actually and we of initially mid-XXXs XXX we So staff able have eye this we an we we feel as we heads know revenue when move into appropriate hybrid moved gain been moving structure, forward. fully cycle I we

well. we the a both I I just was the follow-up. just are know factors then release, fees. in as think from going improvements And improved On expect contract evident of quick admin increased fronts, Perfect. quarter dynamics X hospital like these unit should noted mix same reimbursement-related payer you in these then the last from net something revenue modest mix and Okay. favorable forward? the payer

there? Or maybe is additional then is -- is like So fees, renegotiations? that just like improvement from that. administration something And contract the clarify underlying to is mainly there

we're the handle with what we is of this bit. some pricing. see of little at not orientation-wise obviously, from appropriate go-forward spent into revenue split We'll renegotiating a pretty And that 'XX, This we On our revenue. contract those partners. 'XX is levels lot services of contracts a Jim. and fair the on We I'll feel we're a a up remember, contract time end amount that basis, hospital of are provide. stable

that's if to for play. increase service looks services, additional or However, in always the wants hospital a

which So those same in forward the we will XXXX. we move again, be judiciously at look pace as

can payer mix the take I question. And

pretty for fingers put know that little could the our why. is X-quarter say, a we've about a been I think past sorts payer the in us much of transparent happening seen I we've mix for on that tougher very is we what know bit reset you to

some we're that out quarters, to it and will the next level reset it's over watch a off. probably going how need I think of of type plays to this we but think see couple

increased this final again same decent then a revenue The And if at pretty just question clip there. one Understood. quarter. unit I in flip Okay. could

think of you control in Or was like of this over and steady revenue to same I kind just what about Can stabilize of the a kind up happening unit just more in terms and what's keep function X%. volume? talk maybe forward? growth it a going market of is your little is

Yes.

our it in takers of what's much on pretty we course, of so the for mean, I happening volumes market. volume, are really neonatology business, So our is

strength some MFM. had I have is one think in the area we

have a and have We so acuity higher head we a into that that, there, hold we bit had -- seen bit expect additional little some is XXXX. as will do visits, we

have a from We Jefferies. Jack Slevin with question do

congrats that to touch front, to you below was plan sort clear, around And on that the little it and a that quarterly think, if Or of was Welcome is modeling in biggest things $XXX everyone the million that the the or terms in on quarter pretty RCM contribution, are third I approaching the we moving Are and on think if the any on the is on into expect folk's on How A do still the the then confirm that third that's benefit rate things guess, quarter to revenue plan, in I trend line? quarter can fourth Kasandra, just quarter? then here, front? restructuring there embedded that commentary the probably like think in on the benefit on it want X you the in basis? minds about fourth any the that. couple run a of restructuring quarter. on in you guidance EBITDA pieces, you'd X I of

year, about at look of is was And $XX dispositions on and fourth on in million. did impact our will that if We about think of it during We activity I quarter. that $XX that, the mostly let year-to-date practice slated that it's know the So the on in the that unit toward backloaded is practice dispositions and that you activity. quarter, you million. of quarter, see the the really the the the most non-same revenue topic, you last mentioned end

would by of what the number be have flow So our the anticipate a $XXX in on quarter. but do million roll from about expectation contribution, we do getting through expect the will X/X May that we the that of most that we the to out to restructuring. see will of rest that about in million while come that of in it is suite the year of of end portfolio fourth will $XX put our 'XX. the revenue, with 'XX, and full EBITDA into We And

it. EBITDA that call front? Got then pretty it, plan -- everything on How like can That's plan any Okay. sounds basis mean XX- we about what of how to could a sort it -- were revenues either build to if in a, the a and out and according go And where what what's for material from to is revenue to rev on RCM continues maybe should XX-month think cycle, to framework everything mean earnings. an about years there. there Obviously, opportunity according think or really helpful. the headwind 'XX you should was is I front, 'XX that you going both

Yes.

a on as of One to September of what expect we're 'XX. of million have $X.X out and that no kind and going a in XXXX, we move were March XXXX are to performance moved be little is revenue disruption able The was improved of feat. with about fact we day $XXX being quantify early about a all of will stabilization. clear of thing material that we XXXX just between So in we billion terms we

fully our to very can now up to improved trained are be We're what for we're and ready to not guide up we're that looking be teams expect looking the and to future. So to vendor absolutely there about performance, We collaboration but performance, speed staffing we speed. and and to we're automation, while the will pleased gets going house improve ways really when. the may our quantify move

we Bank. a And from Instructions] question Chickering have with Pito [Operator do Deutsche

be in for your else? subsidies the something you've Pito. ask to Kieran commented wanted ability know I you've maybe additional hospitals, that seen in is if improvement funding form on from of just secure sounds lot that of This to I the any whether still before of majority them of these There's groups you and don't like subsidies out get of are that in to but there lot cases. kind a us. asking a getting from hospitals, for specialty your still or

was XXXX. if I So just in that think might be an wondering you opportunity

out the on that contract Yes. adult there Kieran, Jim. other it's specialties, of some particularly We side on lot know for a noise of the from hospitals. there's revenue

at those and in always beginning contract. with the a require needs 'XX our Our or again, will in done have service would successful we a where call, associated and line of late XXXX. the believe we those relationship those contract need earlier the as been have staffing, If of has And fully beginning said we that hospital on us again, we we again, hospital stable partners to because revenue, been it's largely in very number through approach negotiating needed we've with of if inflation costs, those. increased negotiate wages of partners. to inflation got our And we in the increases new have I of the

there's I but the same have. service have some opportunity lines requirements that that think So the of an don't there, we adult

the it. second, from just another and helpful. generation cash like cash That's should RCM It Got flow then seems benefit good flow And divestitures. on the quarter.

the in that you near you're would commentary pipeline under just on into leverage. thinking provide you're And Xx any back be term So getting how M&A great. to see the about wanted now can

we We're the on Yes. services. with happy the core have pretty pipeline

then of up in opportunity real And 'XX. there's tail a here so end the year there. the and we into think Coming

both number path acquisitions really of can the we think we down and So there's our pipeline, start inorganic meaningful organic our is that a but at on. looking focus

ship that Now other in some of terms ride we we've these of facing. the headwinds are

a We Rice A.J. do question UBS. with have from

portfolio you cash generating at can this normalized There's that what broadly run you been revenue there's just point? free There's from or cash cash you're on question, a reworked. that little even of restructuring. rate echo flow, sense anyway, either management the obviously, a flow there. Do you've But operations a is more a cycle have maybe the flow

year, it's operating probably general about. of baseline range. think our in a Charlie. got our A. guardrails parts. looking this a historical moving forward, which to set X/X of has That's Clearly, good been EBITDA we've of think the kind that's is operating a that XX% -- to lot to probably some kind flow has cash of conversion of I can J., in think I But been typically GAAP experience good give and reference, about.

couple quarter you cash a as to got the first through then flow are you've committed 'XX. -- And is Okay. committed of that things said, of the

You things, deployment little just give a on strategy more capital but about a here. from thinking capital on deployment. update your M&A, other about repurchases, of just broadly talked share goal Maybe

Yes.

head So all options of M&A. debt deploy balance finalized may excess a sheet the or always to course, will all about is our the we course, I We, message as available some if use cash But at a paying should we're of there think share cash. do what our the flexibility we talking 'XX, budget our as repurchases, where We into we we, on us into combination bit move see We to to have down But early that get those. were of 'XX we actually year. look excess at expect to potentially capital. we optimal with and in look of we as in that have place cash

Okay. And clarification. point maybe of just X final

to need maybe is -- yes, other the continue guess, the million year stranded restructuring, next hard of number? getting there opportunities -- that corporate I $XX any the X? incorporate practices, over I million a there, is that does is Or just portfolio On because of from those rid the or overhead doesn't downsizing or would the that expense $XX any of

wouldn't have it that activity, I be exiting this potential the bit organization. is the the we our to for the was suite estimate. are supported better get number. practices a know actually through to $XX the but of a it out all that million There call little that I of intended -- when hard is we come full costs

for that's additional right moved 'XX, our of we part always what doing we're really We now with into look for planning. as and budget 'XX will opportunities efficiency

Please at [Operator no Instructions] further continue. we time. have And this questions

of day. thank So thank a operator, morning. all great call you, Have and this the for you joining

for Thank using for Teleconference. and you does Executive participation you. conclude conference our today. Thank your That for AT&T

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